August 12, 2010
I have read with great interest the desire by some to create a fiduciary standard for Brokers, Dealers, and investment Advisers. I find it exceptionally difficult to believe that in an industry which is already regulated tightly can benefit from inserting an additional level of regulatory apparatus. This action would not provide any meaningful benefit to the client or the industry.
The suitability standard currently governing broker-dealers and registered representatives is a robust and heavily enforced standard, to say the least. With monthly communications reviews, monthly correspondence publications, quarterly compliance training, annual training, internal auditing, external auditing, and weekly bulletins to read, broker/dealers are both well educated and well regulated.
The real question is: will the proposed plan provide a tangible benefit to buyers of financial products above and beyond the current regulatory system. The answer is no. The number of unscrupulous agents is low, and the current regulatory system tracks and eliminates such people. In short, the current system works. What is certain to happen is the cost to acquire theses services and products will increase, benefitting no citizen. Further, he client will be faced with limited and homogenized choices for investment tools. Any sales professional who offers a unique and insightful product mix would be subject to fiduciary consequences for circumstances beyond their control.
I would encourage you to apply a modicum of common sense to an industry that is already highly regulated. The need for Fiduciary Duty guidelines as outlined in File No. 4-606 is simply not necessary and will cause every investor to pay more for investing services. Please do not allow this form of regulation to proceed.